Zomato enhances food delivery services by acquiring Uber Eats, says GlobalData

Following the news that Zomato has acquired the Indian operations of Uber Eats for around US$350m;

Shagun Sachdeva, Consumer Insights Analyst at GlobalData, a leading data and analytics company, offers her view:

“In an environment where competition among online food delivery players in the Indian market continues to intensify, Zomato has taken a calculative move to be the front-runner. The strategic deal comes at a time when price-sensitive Indian consumers are demanding more quality and value for their money from online foodservice providers.

“The move forms a part of Zomato’s bigger plan to expand its restaurant partner network to ensure an adequate choice of cuisines for customers. As food delivery is a time-sensitive and service-oriented business, Zomato can capitalize on the acquisition to considerably increase its presence, capture wider consumer base, create new consumer incentives, and expand its marketing budgets and bring in more efficiency in delivery logistics to drive down costs and reduce delivery times.

“The deal will also allow Uber to look at new categories and keep its focus on its local Rides business, where it is already the clear category leader.

“The total food take-away market in India poised to reach US$4.3bn by 2022. The food takeaway transactions are poised to grow at a compound annual growth rate of 15.2% from US$2,423.2m in 2018 to US$4,274m by 2022. This strong growth will be driven by growing number of time-starved and convenience-seeking consumers along with growing Internet penetration in the next few years.

“GlobalData’s 2018 Q4 consumer survey reveals that 53% of Indian consumers make online purchase of meals/takeaways to be delivered to their home. This signifies how evolving consumer preferences are having an impact on restaurant businesses and how it has changed the way food-away-from-home companies are doing businesses.

“With the acquisition of Uber Eats, the Indian food delivery market will be a proper duopoly with just two players in the market and making it extremely difficult for smaller businesses to enter the industry. At the same time, it will be interesting to see how Swiggy responds to this move as it was looking to acquire Uber Eats.”

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